Many business owners find the invoicing process quite tedious and this is also a process that many businesses neglect. Invoicing is however a critical process for your cash flow management. Effective invoicing can certainly help you to get cash quicker into your business. It is however also important to check that the invoices you receive from suppliers etc. meet the standard requirements to ensure SARS doesn’t disallow some of your expenses causing for you to pay more tax. In this video clip I explain what a valid invoice for tax purposes should look like and contain…
The requirements for an invoice to be regarded a valid invoice for tax purposes:
- The invoice should contain the words ‘Tax Invoice’ or ‘VAT invoice’ if you are registered for VAT. If you are not registered for VAT, include the word ‘Invoice’ and avoid making reference to VAT or tax except for specifying that the invoice doesn’t include VAT.
- Name and physical address details of you as the supplier. Your VAT registration number if you are registered for VAT.
- Name and physical address details of the recipient. Their VAT registration number if they are registered for VAT.
- The date when the invoice is issued.
- The invoice number.
- Description of the product / services you are selling.
- The unit price or hourly rate of the product / services you are selling.
- The number of units / hours (quantity) you are selling.
- The total value of the product / services you are selling. If registered for VAT show the value excluding VAT, the VAT portion and the value including VAT If you are not registered for VAT, indicate that the value excludes VAT.
- If you are registered for VAT indicate that VAT is included and the percentage of the VAT.
Use this a checklist to review your invoices as well as invoices received from external parties to ensure compliance.